The data shows that smartphones are the main end devices for gaming. As the largest smartphone manufacturer numerically, with more than a billion devices worldwide, it is no wonder that a company like Samsung also sees the field as a significant growth engine, alongside companies such as Sony and Microsoft, which are already investing heavily in the field in the console sector.
However, while Apple is experiencing an increase in users of its gaming service, Apple Arcade, and Microsoft is determined to complete the huge acquisition of Activision Blizzard, Samsung is still looking for the right strategy to increase its footprint in the field, in part by investing in startups.
Samsung Gaming Complex at IFA 2023 Berlin Conference, September 2023 Daniella Ginzburg
The lion's share of the capital that flows into investing in startups comes from financial venture capital funds. Alongside these funds, technology companies have also begun to enter the venture capital arena more and more extensively over the past decade, through dedicated investment arms, known as CVC.
Unlike venture capital funds, which work to bring returns to investors, the main purpose of these investment arms is not net financial return, but rather locating companies with interesting technology that may constitute commercial and technological partners and perhaps even a future target for acquisition.
The gaming world is gaining momentum and tech companies are storming the field. Photo: AFP
Almost half of the mobile gaming market
Samsung Next is an international investment fund established about a decade ago and serves as the innovation arm of Samsung Electronics. The fund invests in areas such as artificial intelligence, digital health, blockchain, cyber, gaming and robotics.
Eyal Miller, who serves as a senior manager in the fund's innovation arm, is looking together with his team for those companies that are developing technologies that could give a competitive advantage in the never-ending battle for gamers' fingers.
Eyal Miller, Photo: Marcel Deitchev
Miller has led the Israeli branch of the foundation for eight years and previously served in several key positions at Google. Among other things, he was responsible for setting up Google's activity with startups in Tel Aviv. In the past two years, Samsung Next has invested in more than 200 companies, many of them Israeli. According to Miller, "It is my personal choice to lead investments in Israeli companies, based on my deep familiarity with the local ecosystem."
Now, one of the areas the innovation arm focuses on is gaming. Samsung's potential foothold in gaming is clear. It is estimated that there are now more than one billion smartphones made by Samsung, which is a share of about 14% of the global smartphone market. The mobile gaming market is huge in size as well. Research firm Stesta estimates that in 2022, the mobile gaming industry's revenue was $92 billion, accounting for about 45 percent of the gaming industry's total revenue. This year, this market is expected to cross the $100 billion mark.
Children play on smartphones. A market that is growing, even after the coronavirus. Illustrative, photo: ThinkstockPhotos
Roy Ben-Yosef, the fund's investment manager and gaming leader, explained which companies the fund is looking for. "We're not looking to invest in a game studio, because it's almost impossible to pick the winning horse, especially in the world of leisure games. We're looking for infrastructure technologies for the gaming world."
"For example, companies that develop tools to help content creators improve their performance, technologies for converting content from consoles and computers to smartphone and TV formats, companies that use AI to lower costs or shorten development times, and so on," he concludes.
Gaming. Not just on consoles and computers (illustrative), photo: Thinkstock Photos
The coronavirus is behind us, the AIis ahead of us
The gaming industry experienced a big boom during the COVID-2022 period. The equation was clear: people were confined to their homes and had a lot of free time for games. At the same time, even after the crisis ends, the smartphone continues to be the device that accompanies us everywhere. According to a data.ai report, in 5, consumers spent an average of 255 hours in front of their smartphones, and of the 90 billion apps downloaded from app stores, <> billion were gaming apps.
The next revolution in gaming will come, of course, from artificial intelligence. The ability of AI generators like ChatGPT and Midjourney to produce on-demand textual and graphic content demonstrates the potential of this technology to reshape all development and content creation processes in the gaming industry. "This technology is penetrating every area of our lives, including gaming, and it is accelerating rapidly. From digital assets to games, to the creation of entire games autonomously, from the plot to the entire flow of the game," Miller concludes.
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